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Sarepta Therapeutics (SRPT) Up 8.9% Since Last Earnings Report: Can It Continue?

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Zacks Equity Research
·3 min read
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A month has gone by since the last earnings report for Sarepta Therapeutics (SRPT). Shares have added about 8.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sarepta Therapeutics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Sarepta Q3 Loss Widens Y/Y, Revenues Beat Estimates

Sarepta incurred an adjusted loss of $1.42 per share for the third quarter of 2020, wider than the year-ago adjusted loss of $1.14 per share. The wider year-over-year loss can be primarily attributed to a significant rise in operating expenses.

Notably, the adjusted figure excludes one-time items, depreciation & amortization expenses, interest expenses, income tax benefit, stock-based compensation expense and other items. Including all these items, the company incurred a loss of $2.50 per share, wider than a loss of $1.70 in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of $1.89 per share.

Sarepta recorded total revenues of $143.9 million, up 45.3% year over year. Revenues beat the Zacks Consensus Estimate of $131.49 million.

Quarter in Details

The company derived product revenues of $121.4 million, up 22.6% year over year, reflecting higher demand for its drugs. The company stated that COVID-19 had modest impact on sales of its drugs during the third quarter.

The company recorded $22.5 million in collaboration revenues related to its licensing agreement with Roche for commercialization of its gene therapy candidate, SRP-9001 as DMD therapy in ex-U.S. markets.

Adjusted research and development (R&D) expenses totaled $159.9 million in the third quarter, up 44.7% year over year. The increase was primarily due to increased clinical and manufacturing activities related to its micro-dystrophin programs.

Adjusted selling, general & administrative (SG&A) expenses were $57.2 million, down 4% year over year.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -15.33% due to these changes.

VGM Scores

Currently, Sarepta Therapeutics has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sarepta Therapeutics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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